Question

Mary is an African American woman who wanted to buy a home but did not qualify for a traditional mortgage. She had no choice but to take a high-interest rate loan, which initially she was able to afford but then the interest rates doubled, and she was forced to foreclose. Mary likely had a(n) _____ loan.

Answer 1

Answer:

subprime loan

Explanation:

Subprime loans are loans that charge a higher interest rate than normal market interest rate. They are usually given to people that don't qualify for prime rate loans (which charge a normal market interest rate). Since they are high risk clients, the creditor charges higher interest rates.